Trump Coal Rescue Hits Pothole

January 8, 2018

The Federal Energy Regulatory Commission on Monday unanimously rejected a proposal by Energy Secretary Rick Perry that would have propped up nuclear and coal power struggling in competitive electricity markets.

The independent five-member commission includes four people appointed by President Trump, three of them Republicans. Its decision is binding.

At the same time, the commission said that it shared Perry’s stated goal of strengthening the “resilience” of the electricity grid and it directed regional transmission operators to provide information to help the commission examine the matter “holistically.” The operators have 60 days to submit materials. At that time the agency can issue another order.

The plan, however, was widely seen as an effort to alter the balance of competitive electricity markets that federal regulators have been cultivating since the late 1980s. And critics said that it would have largely helped a handful of coal and nuclear companies, including the utility FirstEnergy and coal mining firm Murray Energy, while raising rates for consumers.

The argument coal and nuclear proponents make is that those fuels provide “base load” power that is more reliable than a mix of renewables and natural gas – and are therefore critical for “national security”.

Recent events shed some light on the fallacy of that idea – when in the midst of last week’s fierce “bomb cyclone”, the Pilgrim nuclear facility in Massachusetts tripped offline due to a grid snafu.

Amid howling winds and rising seas, Entergy’s Pilgrim nuclear reactor was forced to shut down shortly after 2 p.m. when one of two 345-kilovolt transmission lines that supply the plant with electricity “became unavailable.”

The 728-megawatt plant continues to receive power from a second line, Nuclear Regulatory Commission Region I spokesman Neil Sheehan told The Cape Cod Times. The reactor was operating at full capacity Thursday when the power line failed, and the plant was shut down manually. Plant managers deployed diesel generators for safety systems.

On Wednesday, the group Pilgrim Watch had asked the NRC to order the reactor closed during the severe snow storm, but plant managers and three onsite federal inspectors decided to keep operating, the Cape Cod newspaper reports.

Pilgrim was previously shut for 12 days in 2015 when two 345-kilovolt transmission lines became inoperable during a snowstorm. The plant is categorized as one of the country’s worst performing reactors. It is slated to close for good in mid-2019.

Jan 4 (Reuters) – Entergy Corp said on Thursday it shut its 688-megawatt Pilgrim nuclear power plant in eastern Massachusetts because of the failure of one of the two lines that connect the reactor to the New England electric grid.

The outage occurred during a winter storm that tested the power grid’s ability to keep the lights on as homes and businesses used most of the region’s natural gas supplies for heating, leaving less of the fuel available for power generation.

But hey, those appointees can't have made the decision on rational grounds. No, it must be a conspiracy pic.twitter.com/FmKv3JJ0fQ

In its September letter announcing the NOPR, the DOE argued that the expected retirement of coal and nuclear plants in the nation’s wholesale power markets could put the U.S. power supply at risk. FERC, however, said the agency and supporters of the rule failed to prove that to the commission.

“While some commenters allege grid resilience or reliability issues due to potential retirements of particular resources, we find that these assertions do not demonstrate the unjustness or unreasonableness of the existing RTO/ISO tariffs,” FERC wrote in the order. “In addition, the extensive comments submitted by the RTOs/ISOs do not point to any past or planned generator retirements that may be a threat to grid resilience.”

Additionally, DOE and its allies did not convince the commission that the NOPR’s cost recovery proposal would be an improvement on existing market structures.

“[T]he Proposed Rule would allow all eligible resources to receive a cost-of-service rate regardless of need or cost to the system. The record, however, does not demonstrate that such an outcome would be just and reasonable,” FERC wrote. “It also has not been shown that the remedy in the Proposed Rule would not be unduly discriminatory or preferential.”

The 90-day fuel supply requirement, FERC noted, would “appear to permit only certain resources to be eligible for the rate, thereby excluding other resources that may have resilience attributes.”

Low natural gas prices, not high renewable energy penetrations, are the main cause of low and negative electricity prices that are negatively impacting coal and nuclear operators, a new report from two DOE national labs finds.

The findings have important implications for the current federal proposal to provide cost recovery for generators with 90 days of fuel supply onsite, such as coal and nuclear plants. Advocates for these resources argue they are needed for reliability, but disadvantaged by state and federal supports for variable renewable energies (VREs).

The nuances of electricity pricing are revealed in the question of negative prices, the report says. Negative pricing occurs when supply exceeds demand and when generators bidding into the market have an economic incentive to pay load to take their output.

There are two common reasons for excess supply. The first is over-procurement. The other is local transmission congestion that prevents supply from being widely distributed.

There are two common economic incentives for generators to continue operating in a negative price environment. One is that it may be more costly for inflexible coal and nuclear generators to dial down operations than to sell at negative prices. Another is that it may be more profitable for renewables supported by production tax credits or state mandates to sell at negative prices than to be curtailed.

Nationally, “negative prices have concentrated in areas with significant VRE and/or nuclear generation along with limited transmission,” the report says. It is also most common “during periods with lower system‐wide load.” Negative prices have increased recently in California and showed up in Texas in the early 2000s, when a policy-driven wind boom overwhelmed the state’s transmission capacity. New capacity has mostly eliminated the issue in Texas.

Brattle Group Principal Hannes Pfeifenberger told Utility Dive negative pricing gets attention because “it is so counter-intuitive that a price can be negative.” It seems to suggest “something is wrong with the market,” he said.

But when coal and nuclear plant operators like FirstEnergy and Exelon “complain about negative prices, they are really complaining about low power prices,” Pfeifenberger said. “They argue subsidized wind and solar are depressing the power price, but the report shows that low and negative prices are almost always due to low natural gas prices.”

Coal mining deaths surged in the U.S. in 2017, one year after they hit a record low.

The nation’s coal mines recorded 15 deaths last year, including eight in West Virginia. Kentucky had two deaths, and there were one each in Alabama, Colorado, Montana, Pennsylvania and Wyoming. In 2016 there were eight U.S. coal mine deaths.

West Virginia has led the nation in coal mining deaths in six of the past eight years. That includes 2010, when 29 miners were killed in an explosion at the Upper Big Branch mine in southern West Virginia.

Great to have generating capacity with 90 days on site fuel supply when surface water temperatures and droughts (enhanced by CO² temperature forcing) force idling of the capacity when AirCo needs are highest; great to rely on base-load fuel supply when natural disasters (huuricanes and flooding) force idling of generating power (like shutting down nuclear plants, or like electricity in Florida after a hurricane, because grid concentration is the opposite of resilience). Why have 90 days of on-site fuel? Well, because transit throughput and other problems related to lack of resilience requires it. Not to mention plant closings for maintenance and refurbishment.

Forgot to mention the high quality of life traditionally associated with coal miners, and longevity and healthy lungs associated with coal consumption. So much clear thinking by Rick Perry who wisely wants to act ahead of developments!